I had a chance to have a one-on-one interview with the management of Lippo Mall Indonesia Retail Trust (LMIR) this afternoon. The top 3 management – Mr. Alvin (CEO), Mr. Lo (CFO) and Mr. Wong (Financial Controller) were all present during the short 1 hour meet-up.
It was a great chance to have a close up understanding on their views of where the Reit direction is going to go in the next couple of years and I will try my best to share as much as possible from this meeting.
The first question which many of the investors have similarly asked I am sure is why would they have their lease income to be denominated in their home currency (IDR) while holding debt in SGD. As much as I have guessed, the reason is because they would be able to save the interest charges from the much lower interest rates we have in Singapore as compared to Indonesia. However, they would still be bearing the risk of a volatile currency movement, if unhedged.
As much as they have hedged exchange currency risk between IDR and SGD, the plunge in IDR we saw in the past couple of months prove too much to impact the bottomline and DPU to unitholders suffered as a result from what we saw in their recent Q1 results. This is despite having year on year growth in both gross income and net property income in absolute IDR figures.
I also asked about their recent placement in Nov last year and whether it is becoming increasingly difficult to find acquisition in Indonesia that are yield accretive to investors. The CFO mentioned that unlike other Reits in Singapore which grows over time mostly via organic growth rather than via acquisition (because of land scarcity in Singapore), LMIR has many pipelines of assets from their parent group that they can acquire that can immediately be yield accretive. Being a non-vested shareholder at this point, I am unable to comment on his statement.
Overall it was a good quick chat with the management team and they were very friendly. It was first the business then the direction then the things they do in the office with regards to their everyday job. It was a nice sharing and experience overall.